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Hong Kong Remains the Most Attractive APAC Retail Market for New Entrants

Hong
Kong, July 5, 2017– Hong Kong remains the
most attractive Asia Pacific market for new retail entrants as global retailers
turn more conservative toward expansion, according to CBRE’s newest report, How Active are Retailers in APAC?

Most
retailers in Asia Pacific are becoming more risk-averse as they expect the
retail environment to remain challenging in 2017. In light of structural
changes and shifting consumer preferences, retailers are focusing on investing
in developed markets with proven sales performance such as Hong Kong.

With cost escalation a
major concern for retailers, Hong Kong’s strong rental correction over the past
two years has also made it a particularly attractive market.

“With the significant downturn in retail rents in
Hong Kong, new entrants can enjoy more affordable rents while benefiting from
the maturity and variety of the city’s retail landscape,” said Joe Lin, Executive Director, Advisory &
Transaction Services – Retail, CBRE
Hong Kong.

Expansion Led by F&B Sector

The F&B sector
continued to drive retailer expansion in Asia Pacific in 2016. The number of new
entrants to Hong Kong jumped to 89 in 2016 from 73 in 2015, with two-third from
the F&B sector.

“Thegrowth of the F&B
sector continues to be supported by consumers’ tendency to eat out and landlords’
strategy of diversifying their tenant portfolio to protect against e-commerce
and enhance their retailtainment offerings,” said Nicola Tang, Associate Director, Advisory & Transaction Services –
Retail, CBRE Hong Kong.

Rising Demand to Expand in Existing Markets

Fewer retailers, or 25%, intend to expand to a new
city within an existing country, compared with 43% a year ago. Meanwhile, about
one-third of respondents said they plan to expand within existing cities,
particularly those which have proven to perform well. This reflects the
risk-averse attitude of retailers, with many focusing on building brand
awareness in prime areas rather than expanding rapidly across the entire
country.

The report tracks new retail entrants in 26 Asia
Pacific cities in 2016. To be counted as a new retail entrant, the retailer
must originate from a foreign country, setting up a brick-and-mortar store in
the city that it never been there before. The report also surveys 71
international retailers to gauge their expansion intentions in the region in
the next 12 months.

Disclaimer:

Neither CBRE nor its affiliated companies make any warranties or claims on the implied accuracy of the information contained herein.